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Sun 4 Dec 2011 10:45 AM

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Emaar at 3-month high; UAE traders eye MSCI

Saudi petchems fall on fears demand from China may wane; index ends little changed

Emaar at 3-month high; UAE traders eye MSCI
Dubai Financial Market is the only listed bourse in the region

Saudi Arabia petrochemical stocks fell on concerns that demand from China may wane, while insurance and food stocks gain.

The kingdom's index ended little changed, easing 0.01 percent to 6,169 points. It ended at a two-week high on Saturday.

"The overall picture of the Chinese economy is gloomy in terms of manufacturing, which is affecting sentiment in petchems," said Mohammad Omran, member of Saudi economic association.

China's factory sector shrank in November in the face of weakening demand both at home and abroad. China is one of the key export markets for Saudi petrochemical producers.

Saudi's petrochemical index shed 0.3 percent with bellwether Saudi Basic Industries Corp (SABIC) down 0.5 percent.

Trading was concentrated in insurance, food and agriculture stocks, which often attract speculative buyers.

Qassim Agriculture surged 6.6 percent. Tabuk Agriculture Development slipped 0.6 percent and Saudi Fisheries Company dips 1.3 percent. These stocks are among the top 10 by turnover.

"The sentiment is speculative-driven which is unhealthy," Omran adds. "The market is still in an unclear direction. We believe the short-term move will be between 6,000 and 6,200 points."

Qatar's index reached a three-week high, with some investors betting MSCI will upgrade the gas exporter this month.

Doha's benchmark ended 1.1 percent higher at 8,759 points, its highest close since Nov 14.

Bluechip stocks were the main gainers, with Qatar Telecom (Qtel) rising 3.6 percent, Industries Qatar adding 1.3 percent and Masraf Al Rayan climbing 1.2 percent.

"MSCI is a big factor... with more local institutional and retail participants buying in Qatar," said a Doha-based trader on condition of anonymity.

MSCI said on Friday it would announce on Dec 14 whether it would upgrade UAE and Qatar to emerging market status. The decision was delayed from June.

Dubai's bellwether Emaar Properties ended at a three-month high, surging amid sharp gains on UAE markets as some traders bet the oil exporter will be upgraded to emerging market status by influential index compiler MSCI.

Shares in Emaar rose 5.5 percent to AED2.86, their highest close since Aug 29.

"Emaar is on top of the list for joining an MSCI upgrade," said Talal Touqan, head of equity research at Al Ramz Securities. "Breaking 2.75 was a major step towards exiting the downward spiral."

MSCI will announce on Dec 14 whether it will upgrade UAE and Qatar to emerging market status from frontier markets, having delayed its decision from June.

Dubai's benchmark gained 1.8 percent to close at 1,404 points, its highest finish since Oct 31.

On Wednesday, the UAE said it would set up a AED10bn ($2.7bn) fund to help pay low-income citizens' debts and announced plans to raise wages of some state employees, boosting sentiment on local equity markets.

"The [AED]10bn fund is rather like a windfall for banks that have strong retail exposure," says Touqan.

Abu Dhabi's index also rose, up 1.2 percent to 2,473 points. Banks supported, with First Gulf Bank up 5.3 percent, National Bank of Abu Dhabi and Abu Dhabi Commercial Bank each rising 2.8 percent.

Oman's shares ended at a two-week high, with most Gulf Arab markets making gains as upbeat world equities bolster sentiment.

Muscat's index rose 0.6 percent to 5,509 points, its highest close since Nov 17.

Telecom stocks were the main support, with Nawras rising 1.8 percent and Oman Telecommunications gaining 0.7 percent.

"Overall global sentiment has improved, along with the institutions looking (for) bottom fishing and good dividend stories in Oman," said Kanaga Sundar, Gulf Baader Capital Markets head of research. "The GCC has emerged as net buyers for the day. Foreigners [from outside the Gulf] have been on both the buy and sell sides," he added.

Elsewhere, Kuwait's benchmark slipped 0.1 percent to close at 5,829 points, halting a four-day advance.

Logistics firm Agility fell 1.3 percent after saying on Sunday it has bid about KD25.6m ($92.44m) to acquire a strategic stake in Kuwait Health Assurance Co (KHAC).

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